What always happens

In today's nothing-ever-gets-better story, we begin with a lawsuit filed by New Orleans short term rental operators which contends that, even though the city's latest set of regulations gives them almost everything they could want, that still is not enough. These landlords have the resources to keep pushing back until they get their way.  They'll get it eventually.

The suit argues that by preventing owners who formerly held temporary licenses from continuing to operate short-term rentals, the city is violating their rights.

“We were granted a license and had a fair and reasonable expectation that we were going to be able to renew our licenses, as long as we followed the rules,” said Eric Bay, president of the Alliance for Neighborhood Prosperity.

The city did not respond to a request for comment on the suit.

When the council changes the rules on what a property can be used for, existing businesses are typically allowed to stay in operation as “non-conforming uses” as long as they do not close for more than six months.

In discussions leading up to the passage of the new rules, however, city officials said that policy would not apply to temporary rentals since they did not count as full-time uses, a requirement to be granted nonconforming status.

Not being a law talking guy, I can't say what ANP's chances are of winning in court. It sounds to me like a bad argument but you never know, with the right judge...

The case was originally assigned to Civil District Judge Robin Giarrusso, who recused herself because her son is Councilman Joe Giarrusso. It was reassigned to Judge Nakisha Ervin-Knott.

In any case, all they really have to do is keep making the argument over and over.  Their organization has enough money and influence that eventually the right councilperson will take them seriously and they win. Because that's what always happens.

In a way, the damage has already been done. Several years of STR proliferation has supercharged the already out of control speculative real estate market in New Orleans exacerbating the housing crisis. This is reflected in the sticker shock experienced by homeowners all over the city after this year's quadrennial property reassessments. HousingNOLA's Andreanecia Morris writes in this Lens op-ed about the impact of those assessments on renters, who will have the cost of tax increases passed on to them, as well as the city's most vulnerable homeowners.

One of the challenges in dealing with the affordable housing crisis is the fact that some people don’t understand that it affects everyone. The biases many people have lets them (namely middle-class homeowners) believe that they are immune. Those who own their homes are not exempt from the impacts of our city’s affordable housing crisis. HousingNOLA’s data driven process has addressed tax issues from year one. Gentrification of historic neighborhoods and increased market pressure across the city have driven increased property values every year since Hurricane Katrina. Only seven out of 72 neighborhoods include census tracts which did not see an increase in housing values between 2013 and 2017. The median home value in New Orleans has increased by twenty-five percent since 2014, according to MLS data. There is ample data to demonstrate how vulnerable Orleans Parish homeowners are to any significant changes in their tax rates:

• Forty-one percent of homeowners are cost burdened—with nearly a third of owner-occupied households earning an annual income that is below the median income;
• Forty-four percent of owners have paid off their mortgage or inherited their home;
• A third of homeowners are over the age of sixty-five. Eleven percent of all homeowners in Orleans are cost burdened senior citizens.

Unfortunately, the mayor doesn't seem to have much sympathy for housing stressed residents She's also asking voters to approve a whole new 3 mils on this fall's ballot. On top of that, she appeared at a city council budget hearing this week to urge the council to "roll forward" its millage in order to capture the maximum revenue windfall from the higher assessments. She has been talked down to asking for a 50 percent roll forward in recent weeks despite having predicted "dire consequences" for not taking the full amount.  Councilmembers were not very receptive.

Council members have argued that while the city needs more funding, residents are being squeezed out of the city by higher costs of living. They argue that higher property taxes would not only be a risk to lower income homeowners, it would also be a burden to renters because  landlords are likely to pass those costs on to their tenants.

“The message we’re receiving is the city is increasingly unaffordable to live in,” Palmer said.

She again stressed that there could be other sources of revenue the city is leaving on the table. She brought up the amount of money the city could be losing because of homestead-exemption fraud and suggested hiring more sales tax collectors to make sure the city was getting everything it was owed.

In recent months, the council has also discussed cracking down on exemptions for nonprofits and manufacturers that get state tax exemptions. The council also recently created a task force to look into the possibility of creating a parcel fee for property owners.

Yeah, hey, speaking of nonprofit exemptions, here is a pretty big one in the news this week.

There have been multiple efforts to redevelop Charity since the state opted to close it in favor of building the new University Medical Center on the other side of Interstate 10.

The most recent attempt has been underway for more than 2½ years and has largely been led by the Real Estate and Facilities Foundation. That process resulted in officials last year picking 1532 Tulane Partners, a joint venture between the New Orleans-based CCNO and the Israeli company El Ad, to undertake the huge project.

The company said it has been doing due diligence on the property and refining its plans since then.

The redevelopment is expected to cost about $300 million, which will be partially funded with a variety of tax credits. Because LSU will retain ownership of the property, it will be exempt from property taxes.

The lease calls for 1532 Tulane Partners to pay LSU $11.85 million up front and yearly payments for the duration of the 99-year lease. The payments will start at $250,000 a year and increase by 10% every 10 years, eventually totaling about $39 million.

The money from the lease will be divided between the Real Estate and Facilities Foundation and the university itself.

So 1532 Tulane Partners pays LSU to lease the building, takes advantage of various public subsidies and tax credits to renovate it, and none of the money ever gets back to the city. We must be getting something nice in return for that, right?  What are they putting there anyway?

The former hospital building will include about 390 residential units plus retail shops and restaurants.

Tulane University will serve as the anchor tenant in the complex, renting a significant amount of space in the building for student housing and offices, Maurin said.

Plans for the project also include renting about 150 residential units to Sonder, a short-term rental company that already has significant operations in New Orleans. That would be about 50% more units than would be allowed for the property under short-term rental rules the City Council passed earlier this year, which bar renting more than 25% of the units in commercial buildings to tourists.

While the development plans do not need any city approvals because it is state property, the project will have to comply with the city's short-term rental rules, Maurin said. 

That's confusing. How is it they are already breaking the rules they say will have to comply with?  It doesn't say here. Maybe they're planning to be pre-grandfathered in.  Whatever it is, I'm sure they'll get whatever they want while the costs of maintaining the city government continue to fall on those who can least afford to pay. Because that's what always happens.